Money and economy in and around online games

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The computer game industry is still growing fast. One of the major successes of the last decade has been the so-called massively multiplayer online (MMO) games, of which the most well-know game is World of Warcraft (WoW) which passed 12 million players as of October 2010.

There are however many other games with hundreds of thousands of players each, and several games in Asia with millions of players (for example: EverQuest, Guild Wars, The Lord of the Rings Online, Warhammer Online, Star Trek Online, Star Wars Galaxies, EVE Online, Age of Conan, Project Entropia, Ragnarok II, ROSE, Final Fantasy XI, Rohan, Atlantica Online, MapleStory, RuneScape, Tibia, Habbo Hotel, Second Life and so on).

- Here is a list of 200 Massively Multiplayer Online Role-Playing Games (MMORPG).

- Here is another list of "free" MMO games (no up-front costs to play).

Many of the games listed above charge subscribers a fee of around 100 SEK/month (€10/$15), but other games explore a variety of other payment models, including playing for free but paying for purchasing in-game content etc.

In these games, thousands of players can be connected to a virtual world at the same time and spend hours there ever day fighting, exploring, trading, socializing, loving, dancing, conversing, conspiring, cooperating, grinding, hating or killing each other. See this text for an example of how immersive these games can be (and note that it was written almost ten years ago, in 2001). These games are technically complex and the social interaction can easily become even more complex. They raise may questions of which some of them have to do with money and economy. There are three types of economies in and around these games:

- The game industry economy (here is an example of an (old) text analyzing the MMO game industry economy). There are many games, many developers, many publishers, many players and a lot of money in the MMO business. But there is also a lot of competition and many costly, failed projects.

- The in-game economy. How do you design an economy for an online game that doesn't have runaway inflation or other "internal" economic problems? Some game companies have hired economists to help them design good, robust economies that help create vibrant (tamper-proof) environments. There has also been several in-game scams and economy-threatening bugs that players have used, threatening the integrity, the economy and the fun of other players.

- The economy spanning the world inside and outside the game. This is the difficult-to-grasp world where money and "virtual assets" flow between the game world and the real world. This is the gray area where:

• someone can break into your account and "steal" the virtual objects your game character has amassed.
• a Swedish student can have as a summer job to "play" an online game and end the summer by selling off the assets he has developed.
• gamers in third-world sweatshops have as a job to create virtual assets and sell them off to Americans or Europeans that have more money than time.
• the same low-paid gamers provide the service of "leveling up" the character of someone living on the other side of the Earth.
• a game company can sell a virtual space station at an auction where the winning bid was 330 000 US$ (yes, it's true).

All of the three economies above are interesting (i.e. possible to write a thesis about), but the most mind-bending and thought-provoking aspects of these games clearly happen when the real and the virtual world meet (collide?).

In a "classic" (2001) report, "Virtual worlds: A first-hand account of market and society on the cyberian frotier", economist Edward Castronova concluded that if Norrath (the mythical virtual "country" you are in when you play EverQuest) had been a real country, it would have been the 77:th richest country on Earth in terms of gross national production per capita (2226 US$/person and year). This would have placed Norrath right after Russia.

As of today (Oct 11, 2010) there are over 60 characters/accounts for sale at a price of 2500 SEK or more on the premier Swedish auction site Blocket.se - and that's just for World of Warcraft accounts.

There is a wealth of articles and texts available on this topic and I might post some of them here at a later point in time (although I haven't kept up with recent research in the area). Anyone interest in this topic, can for a start search for and read texts by Edward Castronova, Vili Lehdonvirta, Dan Hunter, Greg Lastowka and Julian Dibbell. Another excellent resource is Lehdonvirta's Virtual Economy Research Network (especially check out "Bibliography" and "Research links"). Also please check out the blog Terra Nova (where all of these authors and many other virtual worlds researchers hang out). If you read Swedish, please also check out some of the master's theses already written on the topic that I have supervised.

Your task is to, within the framework of your thesis, explore an issue having to do with money and economy in and around online games. Since the area is wide, further discussions must be held to further delineate and specify a suitable research question of your thesis.

Possible research methods could for example include one or a combination of the following methods: literature study, read/analyze interaction on discussion fora or auction/commerce websites, interview people or do a survey, play an online game (methodically), some lighter (script) programming etc.

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